Supply Sourcing Shift from Japan to other Asian Countries Accelerates in the Next Five Years

UPS announced the results of the 2011 "Change in the (Supply) Chain" survey, which takes the pulse of the high-tech industry in Asia on the changes in supply chains.

The survey, which was conducted by IDC Manufacturing Insights and commissioned by UPS, revealed the shift in trends among Japanese high-tech companies in supply sourcing locations from domestic to other Asian countries such as South East Asia. The survey also highlights the key factors in the supply chain for Japanese high-tech companies, namely "costs" and "security risks".

Shifting Trends in Supply Sourcing from Japan to South East Asia

The survey unveiled that the Japanese companies interviewed, expect to reduce their domestic supply sourcing by close to half, from 96% to 53% in the next three to five years, while increasing sourcing from Mature Asia Pacific Countries (Thailand, Malaysia, Hong Kong, and Singapore) almost threefold, from 9% to 24%. The same trend was observed in the region, especially amongst emerging APAC countries such as Philippines and Vietnam.

Japanese High-Tech Companies Under Intense Cost Pressures

Asian high-tech companies in the survey identified cost management as a key concern in the supply chain. Almost half the high-tech companies in Asia selected "Reducing total supply chain costs" as the top supply chain priority in the past two years. Japanese companies were found to be especially cost-conscious, with 68.9% selecting it as the top priority. This reveals the intense cost pressures Japanese companies are experiencing, in what is one of the most costly business environments in Asia. Cost is also expected to remain one of the top drivers of change in the supply chain in the next 3 to 5 years.

Beside cost considerations, the Japanese high-tech companies selected security risk as the second most important driver of change in their supply chain, with twenty percent (20%) of the respondents choosing it as the top driver, and over 60% considering it as a top three issue. This is higher than the rest of the region where only 6.9% chose it as the top driver, and 31.5% with the second and third combined, due to the recent natural disasters. On the other hand, risk management and security emerged as the top challenge faced by countries around the region.

"The survey revealed the supply chain issues Japanese high-tech companies are experiencing in the face of globalization and increasing competition from other Asian countries, while supply chains are becoming increasingly more complicated due to supply sourcing diversity. UPS is dedicated to helping Japanese businesses with their growth by leveraging our logistics expertise to address the industry challenges they face," said Masato Umeno, president of UPS Japan.

About the "Change in the Chain" Survey:

·Surveying purpose: Research on supply chain transformation in the high tech industry in Asia Pacific

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About UPS UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at UPS.com and its corporate blog can be found at blog.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.